FAA Probe, Fine Aimed at Eastern : Safety Violations Cited; Parent Firm to Face Scrutiny

In a blow to one of the nation’s largest air carriers, federal aviation officials Wednesday fined Eastern Airlines $823,000, launched an unprecedented plane-by-plane inspection of its fleet and declared that they would examine the fitness of Eastern’s parent company to operate airlines.

Between May and September of last year, Eastern flew one of its Boeing aircraft “on approximately 511 flights when it was unairworthy” because of a missing drain tube in an engine, the Federal Aviation Administration charged.

Eastern’s failure to promptly fix the problem “endangered the lives” of its passengers and was part of “a pattern” of alleged safety violations, the agency said in levying the fine--the second major one against the airline in two years.

Airline Defends Record

Eastern President Phil Bakes called the FAA’s citations “primarily procedural irregularities” and said in a statement: “We welcome (the investigation) because we hope the whole story of Eastern Airlines’ dedication to safety and performance will finally be told.” Bakes said the airline has made “enormous progress” in safety since the FAA fined it a record $9.5 million two years ago.

Analysts, however, said the agency’s new criticism could prove highly damaging both to Eastern, already beset by labor problems, and to Texas Air Corp., its parent company which bought the airline 16 months ago.

Texas Air also owns Continental Airlines and holds the largest share of passenger volume in the country. The Transportation Department said that unless the investigation shows the company is “fit, willing and able” to run air carriers, both fleets could be grounded.

‘Pretty Worrisome’

“It is not the amount of the fine that is of major import,” said Jeffrey R. Perry, airline industry analyst. “It is what it implies. The fact that the FAA is beginning further investigations is pretty worrisome to potential fliers of the airline. It is certainly going to hurt the public perception of Eastern, which already has public relations problems.”

One Washington resident who often flies on Eastern’s popular shuttle service to New York said he plans to switch to another airline.

” . . . I’m going to call Pan Am tomorrow and see if they’ll accept my (frequent flier) miles,” Julius Genachowski, a press secretary to a New York congressman, said in an interview. “There’s no reason to take a risk when safety’s involved.”

The federal announcement had an immediate impact on Wall Street. Texas Air’s stock plunged by $1.125 to $10.625 on active trading on the American Stock Exchange.

In his statement, FAA Administrator T. Allan McArtor said: “While the safety of today’s passenger on Eastern is not at risk, I want to ensure that the continuing pattern of fines, safety violations and apparent insensitivity of some of Eastern’s officials . . . does not erode the margin of safe flight for tomorrow’s ticket holder.”

McArtor and Transportation Secretary James H. Burnley IV, appearing together at a press briefing, each stressed the seriousness of the dual investigations into Eastern and Texas Air but cautioned against public alarm.

“I fly on (Eastern) from time to time,” Burnley told reporters. “If I thought any of the Texas Air lines were putting people at risk . . . we would find immediate reason to pull their certificate” that allows them to operate.

Eastern Appeal Expected

The FAA fine, which Eastern is expected to appeal, cites 10 cases involving hundreds of flights in which Eastern flew planes with mechanical problems, flew planes that had not been approved as airworthy, or did not use properly accredited dispatchers or enough flight attendants.

“I am concerned about the degree to which Eastern’s management systems are providing adequate supervision and control over Eastern’s fleet,” McArtor said. “It is not an individual carrier’s right to determine where those margins of safety should be drawn.”

Both Eastern and Continental are losing money and Burnley said he was concerned that “increasing financial pressure” on Texas Air could compromise safety.

Burnley said FAA inspectors will examine each of Eastern’s 267 aircraft over the next 30 days. The agency has conducted similar inspections of small carriers in recent years, but never one of Eastern’s size.

‘Bombarded by Complaints’

“We’ve been bombarded by complaints about Eastern” from both passengers and aviation industry people, said Emily Trapnell, acting chief counsel at the FAA. “We just don’t have any choice but to go to this unprecedented inspection of all (of Eastern’s) planes.”

The Eastern pilots’ union, which has filed suit against Eastern over labor grievances, applauded the federal action as “long overdue.” Capt. John H. Bavis, one union spokesman, suggested that the inspectors also inspect Continental so that the company is not able to shuffle Continental spare parts and resources to Eastern to “plug the holes.”

Bakes charged that pressure from Eastern’s unions has helped focus disproportionate scrutiny and penalties on the airline and overshadowed “one of the industry’s best safety records.”

Since the massive fine two years ago, the airline has put in place a $15-million “airworthiness reconfirmation” program unmatched in the industry, he said.

Texas Air’s Reply

Texas Air, citing 17 years of experience in managing airlines, said in a statement: “There is no credible basis for challenging the management’s ability or dedication to manage safe air transportation.”

The Transportation Department said it will spend 30 days on a preliminary investigation of Texas Air to determine whether the company complies with all legal and regulatory requirements, has a sound financial plan and competent management.

The safety violations “raise the question of whether the management of these two companies is disposed to comply with the safety rules applicable to air carriers,” Burnley said.

Texas Air has been moving to shift some assets from Eastern to Continental, which is not unionized, and to sell its lucrative shuttle business. Those moves have met with staunch resistance from the Eastern unions.